FCC Enforcement Advisory on Foreign Ownership Disclosures
On April 20, 2023, the FCC released an Enforcement Advisory reminding certain FCC licensees and authorization holders that they must seek and receive FCC approval prior to assignments or transfers of control through mergers, sales, or otherwise and prior to changes in ownership resulting in reportable new foreign interest holders or reportable increases in existing foreign ownership interests. In general, FCC regulated entities, including those that hold licenses or authorizations relating to broadcast, common carrier, or wireless services, are required to receive Commission approval prior to assigning or transferring control of a license or authorization. The Advisory reminds applicants that, during the assignment or transfer approval process, they must provide the Commission with accurate contact information, ownership information (equity and voting interests), including citizenship information on any affiliations the applicant may have with foreign carriers, and certifications of compliance with various rules and regulations.
In transactions involving foreign ownership, the Communications Act establishes 25 percent benchmarks on ownership by foreign individuals, corporations, and governments in U.S.-organized entities that directly or indirectly control a U.S. broadcast, common carrier, or aeronautical radio station licensee. Higher levels of foreign equity or voting interest are permissible if the applicant obtains prior Commission approval by filing a petition for declaratory ruling and the Commission finds it is in the public interest. Such a declaratory ruling only applies to the applicant and cannot be extended to other foreign individuals or applicants that the Commission has not had a chance to review. New foreign owners that seek to obtain a five percent or greater direct or indirect equity voting interest in a controlling US organized entity must seek their own declaratory ruling and Commission approval prior to consummating such a transaction.
The Advisory reminds entities that failing to comply with these requirements can result in monetary forfeitures, divestiture of ownership, continuing reporting obligations, and/or revocation of the underlying license. In recent years, the FCC has issued fines as high as $1.1 million, mandated divestiture of foreign ownership, and mandated reporting obligations in cases where the licensee failed to seek prior approval of changes in foreign ownership.
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